Canara Robeco Bluechip Equity Fund: Aiming for Stability through a Diversified Portfolio

Canara Robeco Bluechip Equity Fund is a Large Cap Fund that has shown superior growth and has clearly outpaced many of its giant-sized peers in the last few years.

Canara Robeco Bluechip Equity Fund holds a superior long-term performance track record and figures among the top quartile performers over longer time periods. Even though the fund has trailed the benchmark and some of its prominent peers by a noticeable margin in the last 1-year and 2-year period, it is not expected to have a lasting impact on its long-term fundamentals. The fund holds high growth potential and has the capability to outpace the benchmark and its prominent category peers over the long term. The returns generated by Canara Robeco Bluechip Equity Fund over the last 3-year, 5-year, and 7-year periods are far better than the benchmark as well as the category average, during which it managed to generate alpha at a CAGR of about 1 to 2 percentage points over the benchmark index.

This outperformance has come at a far reasonable risk when compared to the benchmark and category average. The fund’s Standard Deviation (20.11%, annualised) is much lower than its benchmark (22.72%) as well as the category average (21.68%). Canara Robeco Bluechip Equity Fund ranks high in terms of risk-adjusted returns (as denoted by the Sharpe ratio) and has remarkably outperformed its benchmark as well as the category average.

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Investment strategy of Canara Robeco Bluechip Equity Fund

Categorised under Large-cap fund, Canara Robeco Bluechip Equity Fund is mandated to invest a minimum of 80% of its assets in large-cap stocks. Accordingly, it focuses on bluechip companies and invests in stocks of companies figuring in the list of top 100 companies based on market capitalisation. While selecting stocks for the portfolio, the fund focuses on companies and sectors that are expected to perform better than the general market and uses inputs from the internal quant model to identify investable companies. Canara Robeco Bluechip Equity Fund follows a blend style of investing i.e. it looks for high-growth stocks available at fair valuation and stays invested for a long term.

While building its portfolio, Canara Robeco Bluechip Equity Fund follows a 3-Step investment process designed to achieve the investment objective in a disciplined manner as follows:

Step 1 - Idea generation from the investment universe

Step 2 - Screening process to shortlist investible ideas

Step 3 - Finalising the portfolio

In the screening process, the fund manager gives weightage to competent management, robust business fundamentals, and reasonable valuations.

The fund manager aims to invest in large-sized companies with an established business presence, good reputation, and solid brand equity. Canara Robeco Bluechip Equity Fund usually holds about 45-50 stocks in its portfolio and follows a buy-and-hold investment strategy, which reflects the strong long-term conviction the fund management has when it picks stocks for the portfolio. The fund had a reasonable turnover ratio in the range of 35-45% in recent months.

Canara Robeco Bluechip Equity Fund usually holds a fairly-diversified portfolio of about 45 to 50 stocks. As of August 31, 2022, the fund held 46 stocks in its portfolio spread across sectors. The top 10 stock holdings accounted for about 51.8% of the portfolio. Index heavyweights like ICICI Bank, HDFC Bank, Reliance Industries, Infosys, and SBI currently find a place in the top 5 portfolio holdings. Many of these stocks have been part of the fund’s top holding for over two years now.

Canara Robeco Bluechip Equity Fund’s bet on ICICI Bank, Reliance Industries, SBI, Page Industries, L&T, and Tata Motors turned out to be rewarding in the last one year. However, the fund lost some value on its holdings in Infosys, TCS, and HDFC Ltd., among others.

Among sector holdings, Canara Robeco Bluechip Equity Fund’s portfolio is majorly exposed to Banking and Finance having a combined allocation of around 36.8%. Consumption, Infotech, Auto, Petroleum, and Engineering are among the other prominent sectors in the portfolio with an exposure of about 6% to 10% in each. It also holds diversification to Pharma, Telecom, Cement, etc. The top 5 sectors in the fund’s portfolio together account for around 63.7% of its assets.

Suitability

Canara Robeco Bluechip Equity Fund has evolved strongly in terms of performance by distinctly outperforming the benchmark, as well as most of its large-sized peers even in depressed market conditions. Meanwhile, its performance during market uptrends has been reasonable.

Backed by a well-defined investment process, Canara Robeco Bluechip Equity Fund has the ability to timely pick quality names having high growth potential, and deliver market-beating returns in the long run. The fund has proven its worth for long-term investors and is well capable of generating superior risk-adjusted returns even in stressful conditions.

Despite its relatively smaller size, the fund is well placed to compete with its giant-sized large cap peers and generate market-beating returns in the long run. It is suitable for long-term investors having a preference for the stability of large caps along with the potential to generate decent alpha in terms of returns.

Warm Regards,
Divya Grover
Research Analyst

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Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

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About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

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1. Money Simplified Services Private Limited;

2. PersonalFN Insurance Services India Private Limited;

3. Equitymaster Agora Research Private Limited;

4. Common Sense Living Private Limited;

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12. Suresh Lulla;

13. I V Subramaniam.

14. Murali Ananthan Krishnan.

1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

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4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

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